Are you interested in buying your first home?  Interest rates are very good and home prices have “rolled back” to about 2003 levels in many parts of Silicon Valley.  So if you’re earning a living and want to purchase a home, it’s time to work up a game plan.

Where do you begin? The foundation of home buying is good credit and a downpayment.  Do you know what your credit scores are? If not, there are many online sites where you can run this info at no cost or very low cost. Here’s one: AnnualCreditReport.com.  There are three credit scoring bodies: Equifax, TransUnion and Experian.  Some of the “free” sites aren’t really free – so check the small print.

Often there are small errors on your credit report (such as an old bill which you did eventually pay but is showing as due or delinquent), but you can write to the agency with whatever is amiss and provide documentation to clear it up.  This can take time, though, so you want to start this process when you are not in a hurry. 

If your credit is not stellar, do some research before deciding how to fix it.  Some people mistakenly think that they should close all of their credit cards, and in fact this might not help, but rather hurt, your credit.  Inactivity on some of yourcards may also be counterproductive to your scores. And, of course, if you are over your limits, you definitely want to pay those bills down both to get a lower interest rate and to improve your credit scores.

Downpayment

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If you’re out to buy a Silicon Valley home this year, you may be tempted to look at real estate priced far above your ability to pay and hope that you can write a low offer that the seller will accept.

Don’t count on it.

Lowball offers are contracts written substantially below the list price (and often well below market price).  How low is too low? It really depends on the micro-market of the home you’re interested in (the neighborhood, price range, school district, etc.).  In most of Silicon Valley, houses, condos and townhouses sell within 5% of list price most of the time. The average list price to sales price ratio is usually closer to 1 – 3% of list price. 

My usuall advice to buyers is this: if you don’t think that the home is worth within 5% of list price, then keep looking until you find a home that is.  Most of the time, sellers aren’t prepared to come down more than a few percent. 
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Are you interested in, or thinking of, buying a home in Los Gatos? If so, there’s a Los Gatos homebuyer “start kit” page full of information targeted directly at the needs of Los Gatos homebuyers. Whether you want to browse houses, condos, or neighborhoods, you’ll find tools to help you begin your homebuying journey there. It is a launch pad for loads of information, including:

• Los Gatos homes for sale – view by map
• Los Gatos homes for sale – broken down by price point
• Los Gatos real estate market reports
• Los Gatos home sales prices by map
• Information on Los Gatos neighborhoods, subdivisions and areas
• Information on Los Gatos schools
• Photos of Los Gatos
• Information on Los Gatos history, architecture, parks, and more

Please stop by and bookmark this site. It’s a very helpful “starting point” for buying a home in Los Gatos.

Many Silicon Valley home sellers want to sell their homes As Is. In the case of short sales, it is likely that the sale will be As Is, and with foreclosed or bank-owned properties, you can be fairly sure that it will be an As Is sale.

But what does that mean, exactly?

As Is means that the home will be conveyed to the buyer at the end of the transaction in the same general condition it was in on the day that the buyers wrote the offer. If the roof has leaks, the crawl space is full of termites, and the appliances do not work, that is how it will be on the day escrow closes.

What it does not mean is that the seller can let the property condition deteriorate. The seller must continue to maintain the home and land in the same general condition. So if the lawn was green and well trimmed, the seller cannot suddenly let the grass die and neglect to mow it. If a baseball breaks a window after the buyer and seller have a ratified contract, the seller must repair it. The condition will not have to be better, but it should not be worse, either, than on the day the buyer and seller agreed on the price and terms of the sale.

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Be careful what you wish for. The news stories make it sound so attractive – get a home for 10% less than market value. That may happen. Sometimes. The national average for short sales actually closing is extremely low, by some counts as low as 10 or 11 percent.

What about San Jose area short sales? Lets start with the lay of the land in Santa Clara County specifically (Silicon Valley includes Santa Clara County and a bit of Alameda, Santa Cruz, and San Mateo Counties). Some areas are loaded with short sale listings, others have few, if any. The ˜best deals, in terms of low pricing, are going to be in areas with a lot of the short sales because they sell for less and pull property values down, making them more and more affordable. Those are the areas with lower priced homes, generally, the entry level areas.

In places like South San Jose, the south county areas, and Blossom Valley, for instance, most of the entry level homes are short sales. Values are plummeting there.

In places like Cupertino, Saratoga, and Los Gatos, there are hardly any short sales. Virtually none. And home values are rising.

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